Commentary / Japan

How to cope with Japan's demographic transformation

by Shinji Fukukawa

According to the dynamic of population statistics released on June 5 by the Ministry of Health, Labor and Welfare, Japan’s population fell 269,488 in 2014 — its largest-ever yearly demographic decline. Its total fertility rate (the average number of births a woman gives over her lifetime) dropped to a record low of 1.26 in 2005 and after a slight recovery to 1.43 in 2013, went down again to 1.42 in 2014. With its total fertility rate far below the level of 2.07 needed to maintain the current number of people, Japan’s declining population is casting a dark shadow over its future.

At the same time, the aging of its population is taking place at a rapid pace. The rate of elderly to productive-age population was 1 to 9.1 in 1965 but shifted to 1 to 2.2 in 2014 and will worsen 1 to 1.2 by 2050. Japan has been proud of its universal health care system, which was inaugurated in 1961. But the nation’s social security system, including health care, is endangered by its huge financial burden.

Some European countries are taking measures aimed at raising their population over several decades. But Japan has lagged far behind despite its more serious situation. Under the “Abenomics” policy, some brightness has come back to the Japanese economy. But the country will not be able to restore the sustainability of its economy and the responsive power of its fiscal policy unless it promotes powerful structural reforms to cope with its graying and shrinking population.

First, appropriate countermeasures should be taken to help increase the nation’s population.

The trend of marrying late or remaining unmarried is growing fast in Japan. As the reasons, it is pointed out that the chances for encounters between men and women are scant and that the cost of child rearing is high.

Married couples are having fewer children, reportedly due to the heavy costs of raising and educating them.

Consequently, it is necessary to increase allowances for child rearing and education as well as to improve day-care facilities for children.

Conditions for working women, including maternal leave, must also be improved. Husbands, meanwhile, need to be more aware of the need to help their wives, and increase their readiness to take paternal leave.

Finally, communities as a whole should strive to provide single men and women with more opportunities to meet and socialize.

Second, conditions need to be improved for promoting the activities of women and elderly people.

Lately, more and more women are applying for management-level jobs and the government recommends that women hold 30 percent of managerial positions. To make it easier for women to pursue careers, it is absolutely necessary to improve their working conditions, including allowing them to work from home and utilize flex-time, as well as to reform information systems so that they can give full play to their abilities.

Allowing elderly people to continue to work is also an effective way to help resolve labor shortages. Therefore, it is necessary to make the mandatory retirement system more flexible and to prepare a diversified work system, including promoting social participation of senior citizens in a way suitable for them.

Third, efforts should be made to help extend people’s healthy life expectancy.

Health enhancement is a value that people pursue universally. Extending people’s healthy life expectancy and shortening their period of terminal medical care increases their happiness and reduces the financial cost of public health insurance.

To achieve this, it is initially necessary to spread health checkup systems across the country for monitoring the health of the elderly. It is necessary to detect and treat lifestyle diseases at an early stage and to appropriately control the nutritional conditions of elderly people, including their eating environment, so that they can sustain the physical capabilities needed to do exercise and keep their bodies healthy. It is also necessary to establish an effective health care system designed to provide the elderly with early and advanced medical care when they fall ill.

Fourth, reform of the nation’s social security system should be accelerated.

If the nation’s present population decline and aging trends continue, the current social security system will become unsustainable. It is estimated that the nation’s total amount of social insurance benefits will grow from ¥57 trillion in fiscal 1993 to ¥115 trillion in fiscal 2014 and to ¥148.9 trillion in fiscal 2025. And revenues from insurance premiums are projected to stand at around 60 percent of the benefits’ total. This means that the current social insurance system will become unsustainable. Hence there is a need to ensure all premiums are collected and to optimize payments of benefits through the use of the “My Number” identification system, which is scheduled to be introduced next year.

Above all, to minimize the rise in costs of medical and nursing care services for elderly people in years to come, it is indispensable for the country to carry out such reforms as the introduction of extensive networks of home health care and nursing, and to create combinations of self-help, mutual aid and public support.

Fifth, innovation must be accelerated to develop various industries related to medical treatment and nursing care, and to increase cooperation among them.

These are advanced knowledge-intensive and human value-centered industries that people around the world strongly hope will make great progress. There remain a great number of related problems requiring solutions, such as cancer, intractable diseases, regenerative therapy and dementia.

The need for preventive medicine has already been pointed out. Also indispensable is urban planning that will help elderly and young people coexist comfortably, as well as the creation of building designs and security measures that are suited to senior citizens. Furthermore, hopes are also pinned on the development and improvement of technology to improve the lives of elderly people, such as cars designed to enhance their safety, and robots, equipment and tools to assist the elderly in their daily lives and help them exercise.

To promote medical and nursing care at home, it is also necessary to upgrade and streamline medical and nursing care services by utilizing advanced information and communication technologies, including those that can handle big data.

Aging and shrinking populations are problems confronting many advanced and emerging economies. They challenge us to deeply consider anew such matters as individuals’ views of values, a sense of solidarity among family members and the social system.

Shinji Fukukawa, formerly vice minister of the Ministry of International Trade and Industry (now the Ministry of Economy, Trade and Industry) and president of Dentsu Research Institute, is currently senior adviser of the Global Industrial and Social Progress Research Institute.